What is student loan consolidation
Student loan consolidation combines several of the students or parents loans into a single bigger loan which then has its interest rates paid to a single lender instead of several small lenders. This is used to pay off the balance on the other loans.
In all its simplicity it’s very similar to refinancing a mortgage in a house and so on. Student loan consolidation is available for most federal loans, including FFELP, FISL, Perkins, Health Professional Student Loans, NSL, HEAL, Guaranteed Student Loans and Direct loans. Some of these lenders also offer private student loan consolidation for private education loans, but please refer to the individual since it’s not something everyone does.
Who can take advantage of a student loan consolidation?
Both student and parent borrowers can take advantage of a student loan consolidation. Students and parents cannot combine their loans through consolidation, since only loans from the same borrower can be consolidated. But they can still choose to consolidate their loans separately.
Married students used to be able to do their student loan consolidations together, but this provision was repealed effective July 1, 2006. When married students consolidated their loans together, each spouse became responsible for the full amount of the loan, and the loans could not be separated if the couple got divorced. To avoid such problems in the future, Congress decided to repeal this provision as part of the Higher Education Reconciliation Act of 2005.
Special rules regarding student loan consolidation
Students can only consolidate their education loans during the grace period or after the loans enter repayment. (Loans that are in default but with satisfactory repayment arrangements may also be consolidated.) Students can no longer consolidate while they are still in school. (The early repayment status loophole and the ability of Direct Loan borrowers to consolidate during the in-school period were repealed as part of the Higher Education Reconciliation Act of 2005, effective July 1, 2006.)
Parents, however, can consolidate PLUS loans at any time.
February 5th, 2010 at 5:44 pm
Home owner loans are typically the most popular form of secured loans.
February 11th, 2010 at 6:56 am
i really never thought for that point. but also i’m a real newbie about that.